International Media Watch of news headlines and current affairs reports about Romania

Tuesday, January 22, 2013

Romania plans tax on gas producers to subsidise price hikes

Mon Jan 21, 2013

BUCHAREST, Jan 21 (Reuters) - Romania's government plans an additional tax in 2013 on gas producers, which are enjoying higher profits as a result of the country's energy market deregulation, a draft law showed on Monday.

The tax revenue will subsidise households that are expected to be hurt by rising charges as the European Union's second-poorest state liberalises energy prices, an ongoing process lasting until 2017 for the electricity sector and 2018 for gas.

Romania put off deregulation for years to protect voters in a country where the average individual income is less than 350 euros a month. For millions of Romanians and some industrial consumers tariffs are capped below market prices.

But controlled prices have deterred private investment. The government approved deregulation timetables last year, under an international aid deal led by the International Monetary Fund. The European Commission also requires member states to align prices to EU levels over a number of years.

Under a draft law released on Monday state-owned gas producer Romgaz and top oil and gas producer Petrom, owned by Austria's OMV, would pay a tax of up to 60 percent on income resulting from price hikes that they have been able to introduce as part of the deregulation process.

OTHER ENERGY TAXES

The government also published draft plans for two other taxes on the energy sector, envisaged for February, saying it would use additional budget revenues for investment projects.

Romania plans to introduce taxes of 0.45 lei ($0.14) and 1.25 lei per megawatthour for electricity and gas transporters and distributors, including local units of Czech CEZ, Italy's Enel and Germany's E.ON.

The tax will run until end-2014, and power and gas distributors with less than 100,000 clients will be exempt. The government has estimated the tax will bring an additional 554 million lei ($169.49 million) to state coffers overall.

The leftist government of Prime Minister Victor Ponta will also introduce an additional temporary monthly tax of 0.5 percent of turnover on firms exploiting natural resources, including oil, coal, uranium, ferrous and non-ferrous metal ore.

The tax will be in place only until the government renegotiates its royalty taxes on natural resources in 2014-2015. ($1 = 3.2686 Romanian lei) (Reporting by Luiza Ilie; Editing by Sophie Walker)